When a particle would normally render over a body of water it appears to be rendered under the water. This can be reproduced by causing a particle to spawn by water. A good example of how this can be done is by breaking a block or placing a torch by water. This occurs on all render distance, fancy/fast graphics and all levels of smooth lighting.

The video I had made was bit too big to attack (13 mb) but I did upload to YouTube in case anyone wanted to see what I was talking about. http://www.youtube.com/watch?v=qAtk-n1IP_Q